When you ask the questions below, listen carefully to see if the lender is answering in a straightforward way, without using jargon you don’t understand. When you ask about fees, do they include them all voluntarily? If you think they are trying too hard to push you in a certain direction, go elsewhere.
About the Lender
- Are you licensed by the state?
- Whom do you represent (e.g., a bank, broker, finance company)?
- What are your loan programs? Do you offer VA loans (for example)?
- What is the par rate (the actual rate for a particular loan) for a 30-yr. fixed loan? (He should have the answer at the tip of his tongue.)
- Can you estimate and explain your fees?
- Would you get approval for my loan locally?
- Are you going to hold this loan or sell it?
- Can I see a Good Faith Estimate?
Additional questions for online lenders:
- Is there someone I can talk to whenever I need to?
- How are you keeping my info secure?
- Do you sell my information?
Additional questions for mortgage brokers:
- How do you get paid, in points or commission?
- How much will you make on this loan from the lender?
- Name some of your top lenders.
About the Loan
- What is the interest rate you are offering, and how did you arrive at it?
- How do I know this is the best rate?
- How will the rate change over the life of the loan?
- If an ARM, what is the worst case scenario I could face when the rate resets?
- Are you locking in my rate? For how long? What does the lock cost me?
- Could you estimate closing costs for my loan?
- I need to see what I will pay in addition to the principal. Explain an APR and what is it for this loan?
- What is your income from this loan?
- What am I paying in points?
- What is a Yield Spread Premium and am I paying it as part of this loan? If so, please explain why.
- What are my monthly payments?
- Do I need to pay PMI?
- Are there any prepayment penalties on this loan?
- What index is this loan based on, and how does it work for this loan?
- For a Reverse Mortgage, who will I be working with after closing?
- Here’s my timeline. Are you certain you can get this done in time for closing?
